Does RCL Foods' (JSE:RCL) CEO Salary Compare Well With The Performance Of The Company?

Miles Dally is the CEO of RCL Foods Limited (JSE:RCL), and in this article, we analyze the executive's compensation package with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for RCL Foods

How Does Total Compensation For Miles Dally Compare With Other Companies In The Industry?

According to our data, RCL Foods Limited has a market capitalization of R7.4b, and paid its CEO total annual compensation worth R12m over the year to June 2020. Notably, that's a decrease of 13% over the year before. In particular, the salary of R8.63m, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from R3.0b to R12b, the reported median CEO total compensation was R12m. This suggests that RCL Foods remunerates its CEO largely in line with the industry average. Furthermore, Miles Dally directly owns R27m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. According to our research, RCL Foods has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at RCL Foods Limited's Growth Numbers

Over the last three years, RCL Foods Limited has shrunk its earnings per share by 89% per year. In the last year, its revenue is up 7.4%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has RCL Foods Limited Been A Good Investment?

With a three year total loss of 47% for the shareholders, RCL Foods Limited would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, RCL Foods Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for RCL Foods that you should be aware of before investing.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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